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NLRB Developments

On August 27, 2015, the National Labor Relations Board (NLRB) issued its decision in the Browning-Ferris case, deciding to fundamentally change and expand the “joint employer” liability standard under the National Labor Relations Act (NLRA).

Under current law, a company can be found liable for another company’s unfair labor practices and breaches of collective bargaining agreements. For the last 30 years, the standard has required an analysis of whether two entities share the ability to directly and immediately control essential terms and conditions of employment. The Board’s decision expands the standard to include situations where one entity exercises direct or indirect control.

Last year, SHRM filed an amicus brief in the case, arguing that the existing joint employer standards have been consistently applied for the past 30 years and have not denied any employee the right to union representation under the NLRA. Maintaining a stable and predictable rule would allow organizations to structure their business relationships in a sensible and optimal fashion, SHRM noted.

There is concern that this new standard is ambiguous and will impose unprecedented bargaining obligations on multiple entities in a wide variety of business relationships. According to NLRB members that dissented from the decision, this new test leaves employees, unions and employers in a position where there can be little certainty regarding the identity of the “employer.”

As reported earlier by SHRM, a legal challenge or congressional action is likely to try to block this new standard from being implemented.